Business leaders hail eviction ban
Rob Shaw
The Province
VICTORIA — Commercial landlords that refuse to apply for the federal assistance program to give their tenants a break on rent will be forbidden from evicting those tenants for at least the next month, says B.C.’s finance minister.
Carole James made the announcement Monday, saying members of the provincial economic recovery task force — made up of business leaders across the province — have told her they are concerned that some landlords are refusing to work with their small business tenants and instead choosing to evict them.
“There are landlords who have not applied for the relief, and unless the landlord applies for the federal program, the program isn’t available for small business tenants,” said James.
“Preventing landlords who are eligible from the program from evicting tenants can encourage landlords to apply for the program.”
The province will use its emergency powers to put the ban in place effective immediately, said James. It also means commercial landlords cannot seize the property of tenants.
The prohibition on evictions will remain as long as the federal commercial rent relief programs is in place, said James. It’s currently set to expire at the end of this month but can be extended if Ottawa extends the program as well, she said.
The Canada emergency commercial rent assistance program reduces the rent owed by small business tenants by 75 per cent. Under the program, a commercial landlord can get a non-repayable loan for up to 50 per cent of their monthly costs, if they agree to cut the rent for a tenant by 75 per cent and promise not to evict them. The small business tenant then pays the remaining 25 per cent of the rent.
The program applies to small businesses that pay less than $50,000 a month in rent and have revenue declines of at least 70 per cent due to COVID-19. Charities or non-profit organizations are also eligible.
Critics have said the program leaves tenants at the mercy of their landlords, because only landlords can apply to start the assistance program.
James said there’s no figures yet for B.C. to show how many eligible landlords have applied.
“We’ve been hearing that a number of landlords have applied on behalf of their tenants and obviously that’s the best direction, we want that relationship to be built,” said James.
“We know there are other businesses that actually have agreements with their tenants around rent deferrals. But I have to say it’s been an issue that’s been raised by members on the economic task force, we’ve heard it from small businesses and from MLAs around the province, that there are certainly some tenants who their landlords have been very clear they don’t want to bother. They don’t want to take the time to apply for the federal program.
“And that then hurts the tenants because the tenant doesn’t have the opportunity to have the relief to help them.
“So I expect it will, I hope, make a difference in encouraging landlords to apply now that they won’t be able to evict those tenants. So we’ll be watching those numbers as we go along.”
The Canadian Federation of Independent Business praised the move, noting B.C. stands out among other provinces that have resisted putting in such an eviction ban.
“We’ve been asking for it since March so I think it’s really good news and hopefully will show the way for other provinces to follow,” said Laura Jones, CFIB vice-president.
“It’s a common sense move, really. A lot of landlords and tenants are working it out with each other and many are struggling through the administrative nightmare that seems to be the CECRA (federal rent assistance) program.
“But there are a few stories, more than a handful of stories we’ve heard about, where landlords are being unreasonable with tenants. And this just gives a little bit more breathing space for tenants and landlords to work it out.”
Part of the issue is that the federal program is cumbersome and suffers from long wait times for assistance from the Canadian Mortgage and Housing Corporation, which is administering the program, said Jones.
“There’s a lot of paperwork involved,” said Jones. “We’re hearing some serious nightmare stories.”
There’s also the threshold of 70 per cent lost income for eligibility, which is a much higher amount than the 30 per cent lost income that employees need to show to be eligible for personal federal financial aid. The result is many small businesses struggling to pay rent aren’t captured, said Jones.
There’s also the power imbalance of only the landlord being eligible to apply. “It gives them all the power,” said Jones. “So what B.C. did today helps balance that out a little bit because it gives the tenants back some of that power.”
The organization that represents most commercial landlords in Metro Vancouver and Greater Victoria said it was surprised government moved so quickly to enact a ban when applications to the federal program only opened last week and run until August.
“It’s not like the program has been a flop,” said Damian Stathonikos, president Building Owners and Managers Association of British Columbia. “What I’ve heard from a lot of our members is they are really taking their time to talk to tenants and figure out whether this makes sense.
“Lets say you are a property owner with a couple of different buildings, it might make financial sense for one building but not another depending on the tenant mix, whether it’s a brand new building or older building, where is the location, what is the likelihood of your tenants staying in business. There’s all these factors that come in. It’s a pretty unwieldy program and a lot of paperwork involved. I was talking to one of our members today and he was thinking his final application will be more than 500 pages.”
Landlords are also concerned about potential liability, because they need to get the financial information from tenants proving the loss of 70 per cent of income due to COVID-19 and vouch for it as accurate, said Stathonikos. There’s also confusion on the rules, such as whether an application for a building with multiple tenants can be amended later to include more tenants who want to participate.
“What I’ve been hearing is people aren’t applying in droves right way because they recognize there’s a lot of paperwork right now in place and you also need a tenant that is willing to share their financial information,” said Stathonikos.
The province’s move to ban evictions in the meantime is not a surprise, he said.
“I think the province really wants to try and do everything it can to support the small business community, and frankly our members want to see their small business tenants succeed as well. It’s no one’s first choice to evict a tenant.”
The B.C. Chamber of Commerce said it also supports the eviction ban.
“Taking that option off the table for a temporary period hopefully can bring the two groups together and get some good relief going to small businesses,” said Dan Baxter, director of policy.
There are some businesses that have been able to pay their rent so far, but have now exhausted their resources, he said. “Businesses are starting to run out of cash,” said Baxter. “Most only have one to three months of operating expenses. If they are paying right now, that might not last in the future. Helping them with their rent is a good business decision most landlords would want to take advantage of.”
The Opposition Liberal party called for the eviction ban in a letter to Premier John Horgan last month. Leader Andrew Wilkinson said while the NDP has acted in this one area, it has ignored other suggestions such as a three-month pause on the provincial sales tax, hotel tax and employer health tax.
“We’ve proposed a full slate of real workable solutions for small business and the NDP have cherry picked one of them,” said Wilkinson. “But all they are planning to do is support a federal program that’s not working.”
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